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Federal Court Vacates EPA's Definition of "Navigable Waters" Under SPCC Rule

Beveridge & Diamond, P.C., April 29, 2008

On March 31, the United States District Court for the District of Columbia vacated the Environmental Protection Agency’s (“EPA”) definition of “navigable waters” in the Spill Prevention, Control, and Countermeasure regulations (“SPCC Rule”), 40 C.F.R. § 112.  The regulations require certain oil processing facilities to prepare a plan to prevent oil spills and provide countermeasures to address discharges of oil into “navigable waters.”  When EPA amended the SPCC Rule in 2002, it adopted a broad definition of “navigable waters” that included all waters that “could affect interstate or foreign commerce,” tributaries to those waters, and adjacent wetlands. This definition was the subject of considerable controversy and sparked an immediate legal challenge by the American Petroleum Institute and Marathon Oil Co. (collectively “API”).

In American Petroleum Institute v. Johnson, No. 02-2247, 2008 U.S. Dist. LEXIS 25859 (D.D.C. Mar. 31, 2008) (“API”), the Court considered API’s challenge to the new definition of “navigable waters” in the 2002 SPCC Rule.  API argued that the Agency had violated the Administrative Procedure Act by promulgating an arbitrary and capricious regulatory definition lacking any rational legal explanation.  According to API, the explanation relied on by EPA – namely that “the case law supports a broad definition of navigable waters, such as the one published today” – failed to account for relevant recent decisions of the Supreme Court and the lower federal courts that undercut the Agency’s definition of “navigable waters.”  As a result, API submitted, the definition did not reflect reasoned decision making and must be invalidated.

The Court agreed, finding that EPA’s terse explanation for the new definition was too conclusory and could not be squared with the Supreme Court’s 2001 decision in Solid Waste Agency of N. Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001) (“SWANCC”).1  SWANCC had clarified that, while certain non-navigable waters are subject to federal jurisdiction under the Clean Water Act (“CWA”), Congress had intended only to exercise “its commerce power over navigation” under the statute.  In other words, the API Court explained, the CWA did not establish federal jurisdiction extending to Congress’ full commerce power.  Thus, although SWANCC did not enumerate the specific categories of waters subject to CWA jurisdiction, it did establish limits on the federal regulation of non-navigable features, and EPA’s explanation for the new definition of “navigable waters” in the SPCC Rule failed to recognize these limits.

The Court rejected EPA’s justification for the new definition of “navigable waters” on two grounds.  First, because the Agency offered “no explanation of which cases it relied upon or how it derived support for its broad definition from those cases,” the Court could not determine whether the definition was the result of reasoned decision making.  Importantly, “EPA did not assert that its new definition was merely permitted by the case law, but rather that it was supported by the case law.”  By invoking this justification “EPA obligated itself to provide at least a cursory explanation of its theory.”  Second, the Court found it “extremely difficult to square EPA’s conclusion” that the “navigable waters” definition was supported by case law with the Supreme Court’s ruling in SWANCC.  While SWANCC established that CWA jurisdiction is not coextensive with Congress’s commerce authority, EPA’s definition “appears to assume” that it is.  By defining “navigable waters” to include all waters that “could affect interstate or foreign commerce” without establishing a sufficient legal basis, the Agency disregarded these jurisdictional constraints.  Consequently, the Court found that EPA had not exhibited reasoned decision making and the new definition was arbitrary and capricious.  The definition was therefore vacated, and the previous version of the definition was reinstated while EPA considers how to proceed in light of the Court’s decision.      

While the API Court’s ruling will immediately affect those who otherwise would have been required to update and implement a new SPCC plan pursuant to the 2002 Rule, it has potentially broader implications for all stakeholders with responsibilities under the CWA.  In particular, because EPA’s regulatory definition of “navigable waters” under the CWA § 402 and § 404 permitting programs shares the same language as the definition in the now-vacated SPCC Rule, the ruling could further muddy the legal landscape under these programs as well.  Moreover, the decision comes at the same time that EPA and the U.S. Army Corps of Engineers are considering whether to reissue, revise or recall their joint guidance interpreting the bounds of federal jurisdiction under § 404 of the CWA following the Supreme Court’s splintered decision in Rapanos v. United States.  (For a detailed analysis of the agencies’ joint post-Rapanos guidance, please see http://www.bdlaw.com/news-183.html).  Adding to the confusion are the ongoing efforts in Congress to amend the CWA to extend federal jurisdiction to all waters throughout the United States (E.g., H.R. 2421).  In the meantime, EPA must decide whether to appeal the API Court’s ruling or to accept it and begin revising the SPCC Rule to define “navigable waters” in line with the opinion.  Either way, more litigation and uncertainty over the scope of federal CWA jurisdiction are sure to follow.

For a printable PDF of this article, please click here.

For further information please contact Karen Hansen at khansen@bdlaw.com, Fred Wagner at fwagner@bdlaw.com, or Parker Moore at pmoore@bdlaw.com.


1 The Court also acknowledged the Supreme Court’s latest review of federal jurisdiction under CWA § 404 in Rapanos v. United States and stayed the API litigation until Rapanos was decided in 2006 with a now-infamous 4-1-4 ruling. (For a detailed analysis of Rapanos, please see http://www.bdlaw.com//news-59.html).  However, the API Court was able to avoid applying the competing tests from Rapanos by ruling on the narrower issue of whether EPA’s justification for its “navigable waters” definition in the 2002 SPCC Rule was sufficient in light of SWANCC.

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